2023-08-14 11:00:00
ENERGY – World markets are worried about a strike in two Australian oil fields, which could destabilize the Asian market and in turn lead to supply problems for the winter in Europe.
Since June, the benchmark price for natural gas in Europe has exceeded 40 euros for the first time. The reason ? The possible maintenance of strikes by workers in two Australian natural gas fields. This situation led the market to fear possible supply disruptions.
Contracts soared 40% as a result. This is the biggest rise since March 2022. Traders are worried about a lasting strike and analysts of Citigroup (financial juggernaut, editor’s note) point out that this could double the price of LNG (liquefied natural gas) contracts in Europe and Asia by January 2024.
Strikes in Australia and the impact on imports in Asia
Workers at Chevron and Woodside Energy facilities (major LNG producers) in Australia have voted to strike, which could disrupt the country’s gas exports. This would also lead to a change in the global fuel market. The exact date and the evolution of the social movement are not yet known but the workers could issue a seven-day notice as early as next week and cease their activity.
Asian buyers are “likely to increase their LNG imports” to replace Australian volumes in the event of disruptions, which would mechanically affect Europe, said Nick Campbell, director of the consultancy Inspired. LNG has become a basic source of supply in the European gas mix, so any sign that this flow is under threat drives prices up.
Europe faces price competition
Europe’s dependence on LNG imports, and the possibility of a supply cutoff from Australian facilities (which account for around 10% of global exports) highlight the vulnerability of the Europe faced with fluctuations in global gas supply. An offer that also includes Russia.
Last year, the reserves accumulated during the summer made it possible to avoid the dreaded energy crisis. A spectrum that returns in the middle of August, when it is feared that a regular supply cannot be maintained during the coldest months of the year.
The sharp drop in demand has been an important compensating factor, but the reduction in the global LNG reservoir leaves European countries exposed to price competition for cargoes available in Asia, “especially in the face of higher seasonal demand next winter”said Patricio Alvarez, an analyst at Bloomberg Intelligence.
Tensions in Germany
In Europe, fuel stocks are currently over 87% full, the highest level on record for this time of year. The European Union wants them to be 90% full by November, and many countries, such as Spain and the Netherlands, have already met or exceeded that target. Germany and Italy are almost there. France is at 78% due to supply problems during recent strikes.
On the other hand, the alarm bell has been sounded in Germany. The German association of storage network operators (INES) reports that the threat of shortage will persist until 2027, if the infrastructures are not reinforced. The organization believes that Germany needs more LNG plants, more storage capacity and more gas pipelines to ensure a constant supply in winter.
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